For the week ending Friday, July 25, 2008, the markets closed mixed for the week, on negative housing data, and mixed earnings results. An early rally in financial and airlines stocks, supported by the continued slide in oil prices, was quickly wiped away by ongoing uncertainty in the economy. The Dow dropped more than 280 points on Thursday, marking the worst one day point drop in over a month. However, Friday saw a slight rebound on strong durable goods and a bounce back in consumer sentiment. Only the Nasdaq finished slightly up 1.2% for the week. The Dow and S&P finished down 1.09% and 0.23%, respectively.
Next Week: The markets will await earnings from big energy companies, Chevron, Exxon Mobil, and Chesapeake Energy. Other key earnings reports will include Verizon, Colgate-Palmolive, Disney, Comcast, and Amgen. Economic events to look for are GDP, Employment, Construction Spending, and the ISM Manufacturing Index.
M&A, Deals, Corp Actions:
Solar cell equipment supplier, GT Solar International took a heavy beating on its initial market debut, with shares dropping ~24% from its open price of $16.50/share on Thursday. Other solar companies that went public in the past year, such as Renesola offered on 1/28 and Real Goods Solar on 5/07 have fallen steeply, as much as 15.9% and 1.9%, respectively month to date.
Sirius Satellite Radio and XM Satellite edged closer to deal approval from the Federal Communications Commission (FCC) on Wednesday, with majority of the commissioners voting for an acquisition. Both shares of SIRI and XMSR climbed 5.6% and 18.8% respectively for the week.
Brocade Communications agreed to purchase the internet traffic router and switcher- Foundry Networks for $2.91 billion to increase its product line and create a competitive advantage over networking behemoth Cisco Systems . Foundry’s stock jumped 32.3% for the week, while Brocade sank 19.4%.
General Electric and Abu Dhabi’s investment agency Mubadala Development publicized Tuesday a joint venture for $8 billion that will focus on providing commercial financial services to the Middle East. The two companies also aim to take initiatives in clean energy, aviation, and oil & gas sector. GE’s shares advanced 3.8% for the week on new business enterprise.
Swiss drug maker Roche Holdings offered a full acquisition of U.S. biotech company Genentech for $43.7 billion. Roche expects the combined entity to yield higher exposure to the cancer drug market. DNA shares rose 17.3% for the week on Roche’s offering.
The Nasdaq OMX Group officially acquired the Philadelphia Stock Exchange, the oldest exchange in the US, founded in 1970, and was renamed to NASDAQ OMX PHLX. The acquisition will expand NASDAQ's presence in the derivatives market, as it will operate as the third largest options market in the US. Nasdaq OMX moved higher 4.91% on final deal news
Other Market Moving News:
- Government Sponsored Enterprises (GSE’s) Freddie Mac and Fannie Mae were the topic of a debatable bail-out by Congress which includes a $300 billion program to refinance troubled mortgages with federal insurance. The initial enthusiasm behind the government plan appeared to wear off, as shares of both FRE and FNM fell by 9.9% and 13.8% for the week.
- Financial stocks continued to rally until the Existing Home Sales numbers hit on Thursday morning and dragged down the S&P 500 Financials Index by -6.7%, exacerbated when Gimme Credit LLC reported that investors were cutting exposure in Washington Mutual . The S&P 500 Financials experienced their worst one-day drop since 4/14/2000. Additionally, WaMu’s shares tumbled 35.1% for the week on battered 2Q earnings results.